Refrigerated and dry van truckload carriers alike continued to post strong profits in the third quarter, even as the driver shortage and high fuel prices chipped away at their margins.
Van Buren, AR-based USA Truck said net income increased 35.7% from $1.5 million on 15.6% higher revenues of $85.4 million in the third quarter compared to the same period last year, with net income increasing 98% to $4.4 million on 18.3% higher revenues of $250.7 million for the first nine months of 2004 compared to the same period in 2003.
“Economic conditions in the form of tight industry capacity and strong freight demand afforded us the opportunity to work on revenue quality throughout the quarter,” said Robert Powell, chairman & CEO.
“We were able to grow our revenue, before fuel surcharge, in excess of our tractor growth due to a 4.3% increase in freight rates, which was aided by a decline in empty miles to 8.3% of total miles,” he added. “On the cost side of the business, we saw significant quarter-over-quarter margin improvements, primarily the result of a 22.9% reduction in operations and maintenance costs -- the vast majority of it due to reduced revenue equipment maintenance costs, as there is a very strong correlation between maintenance costs and equipment age.”
Mondovi, WI-based refrigerated carrier Marten Transport said net income increased 39.2% to $4.8 million on 14% higher operating revenues of $97.9 million for the third quarter this year with net income increasing 47.3% to $12.3 million on 10% higher operating revenue of $274.3 million over the first nine months of 2004 as compared to the same periods in 2003.
“Our sales and operations personnel did a great job of addressing rate and lane issues in an environment of strong freight demand and tight industry-wide trucking capacity,” said Randy Marten, the company’s chairman & CEO. “We achieved a 7.2% increase in average freight revenue per total mile and our average freight revenue per tractor per week -- our main measure of asset productivity -- improved 3.1% to $2,976 in the third quarter compared to the same period in 2003.”
He added that increased incentives and higher compensation for drivers helped keep turnover under 60%, as compared to a TL industry average of 116% percent. “Operating a late-model tractor and trailer fleet continued to be an important part of our cost-control and driver recruiting and retention efforts, so we continued to upgrade our fleet by purchasing 206 tractors and 247 trailers [in the third quarter].”
Phoenix-based Knight Transportation said net income increased 32.6% to $12.6 million as total revenue increased 30.1% to $114.1 million in the third quarter as compared to the same period last year. For the first nine moths of 2004, Knight said net income increased 30.6% to $33.3 million as total revenue increased 26.2% to $315.5 million compared to the same period in 2003.
“We were especially pleased with revenue growth of over 25% before fuel surcharge and over 30% including fuel surcharge in a difficult growth environment for our industry,” said chairman & CEO Kevin P. Knight. “In addition, even with industry-leading growth and significant fuel, driver pay, and other cost pressures facing our industry, we improved our margins.”
Knight said growth came from fleet expansion – the carrier added 159 new units in the third quarter -- and 15% higher revenue per tractor, with average freight revenue per loaded and total mile, before fuel surcharges, up 8.3% and 7.5%, respectively. Average miles per tractor were up 1.6% and the average length of haul was up 5.0%, said Knight.
